On Oct. 23, Illumina (NASDAQ:ILMN), a maker of technology used in genetic research, released third-quarter earnings for the period ended Sept. 30.

  • Sales rose 82.4%, driven by the growth in product revenues that grew 90% to $90 million.
  • Gross margins fell 740 basis points because of a product-mix shift toward equipment.
  • Cash from operations deteriorated 59%, primarily because of an increase in accounts receivable.
  • Illumina signed a service agreement with Cancer Research UK to genotype more than 15,500 samples for uncovering factors linked to the development of lung and ovarian cancer.
  • The company expects revenues in the range of $354 million to $358 million for 2007.

(Figures in thousands, except per-share data.)

Income Statement Highlights

Q3 2007

Q3 2006

Change

Sales

$97,510

$53,472

82.4%

Net Profit

$14,503

$16,162

(10.3%)

EPS

$0.24

$0.32

(25.0%)

Diluted Shares

59,395

50,579

17.4%

Get back to basics with the income statement.

Margin Checkup

Q3 2007

Q3 2006

Change*

Gross Margin

61.9%

69.3%

(7.4)

Operating Margin

16.1%

28.5%

(12.4)

Net Margin

14.9%

30.2%

(15.4)

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets

Q3 2007

Q3 2006

Change

Cash + ST Invest.

$352,852

$169,942

107.6%

Accounts Rec.

$79,886

$29,045

175.0%

Inventory

$45,245

$19,397

133.3%

Liabilities

Q3 2007

Q3 2006

Change

Accounts Payable

$22,497

$10,614

112.0%

Long-Term Debt

$400,000

$11,947

3,248.1%

The balance sheet reflects the company's health.

Cash Flow Highlights

Q3 2007

Q3 2006

Change

Cash From Ops.

$5,316

$12,956

(59.0%)

Capital Expenditures

$5,332

$4,328

23.2%

Free Cash Flow

($16)

$8,628

N/A

Free cash flow is a Fool's best friend.

Related Foolishness:

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